CURE In the News

The Home News Tribune front page Oct 14, 2001

Rx for car coverage

By Cheryl Sarfaty
Staff Writer

PRINCETON: As New Jersey continues to suffer from high auto insurance rates, there is one organization that says they have the cure.

The New Jersey Citizens United Reciprocal Exchange - known as NJ CURE- is best described as a "group of people who joined together" who are interested in "getting a good premium that is of premium value," according to Jim Sheerhan, former New Jersey State Commissioner. "We are not an insurance company."

Unlike actual insurance companies such as State Farm, Allstate and Prudential, NJ CURE is a not-for-profit organization. The subscribers - or members - are accepted by NJ CURE based on their eligibility to meet specific criteria (listed below). Once accepted, the member becomes part of the exchange, pooling their money together with the other members and sharing the combined risk.

Subscribers pay a management fee of 12.5 of the insurance cost annually, which goes to the Attorney-in-Fact who manages the reciprocal exchange on behalf of the members, explained Eric Poe, Director of Operations for NJ CURE.

"Your incentive is to control your own destiny and say, 'I'm not going to put in a false claim and I'm not going to drive frivolously because if I do, I actually cost the exchange money - and I'm a subscriber of the exchange."

The more members maintain safe driving records, the bigger the benefits for the entire group: All investment income allows the Attorney-in-Fact to grow the organization, passing any profits to the subscribers in the form of lower premiums or a raised surplus.

"The point is that the assets of an insurance company (i.e. State Farm) belongs to the stockholders of the insurance company," said Lena Chang, co-founder of NJ CURE and an insurance actuary. "The assets of NJ CURE belong to the subscribers of NJ CURE."

Sheeran and Chang co-founded the Princeton-based NJ CURE 11 years ago as an alternative to the high cost of insurance companies in the state.

"Our (business) model is that no risk is better than a bad risk," Chang said. "we don't take anybody who is presenting the picture of a bad risk."

CAR: Not-for profit group offers lower insurance rates

NJ CURE's eligibility guidelines are itemized as follows, though the final decision is based on the driver's overall record:

For a family, NJ CURE will consider a couple as long as they do not have a child who is close to driving age. The reasoning falls back to NJ CURE's three -year rule: A person who has just turned 16, for example, does not have a proven driving record and is, therefore, considered a risk.

"If you have a 10-year old and you joined us back in 1990, you are not going to get cancelled." Poe said. "This (rule) allows us to spend at least two years looking at a husband or wife with a child… before we decide to extend a courtesy to insure an in-experienced driver that might be the couple's son or daughter."

You might wonder how NJ CURE differs from companies like Geico or AIG, since all three are considered direct writers (i.e. no middlemen).

"The fundamental difference is that they are an insurance company and have a profit margin." Poe said.

So what is next for NJ CURE, a group that started with 12 employees and 2,000 subscribers 11 years ago and today has more than 100 employees and has topped 22,000 members?

"Right now, we're thinking of moving into the homeowner's insurance business," Sheerhan said. "And that's important because we know we can save money for people."

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